A North 24Th Street Case Study Tiffany Hunter [email protected]
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University of Nebraska at Omaha Masthead Logo DigitalCommons@UNO Theses/Capstones/Creative Projects University Honors Program 5-2019 Revitalizing the Street of Dreams: A North 24th Street Case Study Tiffany Hunter [email protected] Follow this and additional works at: https://digitalcommons.unomaha.edu/ university_honors_program Part of the Finance and Financial Management Commons, Real Estate Commons, and the Taxation Commons Recommended Citation Hunter, Tiffany, "Revitalizing the Street of Dreams: A North 24th Street Case Study" (2019). Theses/Capstones/Creative Projects. 41. https://digitalcommons.unomaha.edu/university_honors_program/41 This Dissertation/Thesis is brought to you for free and open access by the Footer Logo University Honors Program at DigitalCommons@UNO. It has been accepted for inclusion in Theses/Capstones/Creative Projects by an authorized administrator of DigitalCommons@UNO. For more information, please contact [email protected]. REVITALIZING THE STREET OF DREAMS: A NORTH 24TH STREET CASE STUDY University Honors Program Thesis University of Nebraska at Omaha Submitted by Tiffany Hunter May 2019 Advisor: David Beberwyk ABSTRACT The purpose of this study is to analyze the North 24th Street corridor in Omaha, Nebraska, to highlight the benefits of investing in commercial real estate development, propose tools for financing new development or redevelopment projects, and to suggest methods of building a coherent development plan to avoid gentrification. Commercial development provides the following: quality business space, accessible jobs for an underemployed populace, additional tax revenue, and a reduction in community detriments such as crime, empty lots, and low property values. The North 24th Street corridor has economic potential, as it is less than one mile from downtown Omaha, the core of the city. Investors would be wise to invest in the future of the corridor since several tax incentives and other tools exist to make projects more financially viable. Although the goal is to create a space that is friendly to all people, community members should not be shunned from the future of the corridor, as their voices are a vital component to building a thriving neighborhood that truly meets the needs of the people. Designated community organizations should serve as representatives of the citizens along the corridor. As representatives, the organizations must participate in the development/redevelopment planning process and enforce controls on new projects to ensure agreed upon plans are effectively executed. Ultimately, this study will serve as a guide to facilitate collaboration between the community, the local government, and private developers/investors to effectively revitalize the “Street of Dreams.” Table of Contents Introduction .................................................................................................................................. 1 I. Benefits of Commercial Real Estate ........................................................................................ 2 Background ........................................................................................................................ 2 Commercial Real Estate Benefit #1: Small Business Space .......................................... 4 Commercial Real Estate Benefit #2: Tax Revenue ........................................................ 5 Commercial Real Estate Benefit #3: Accessibility/Transportation ............................ 6 Commercial Real Estate Benefit #4: Reducing Community Detriments ................... 7 II. Government Incentives & Private Investment ..................................................................... 8 Building Mutual Interest ................................................................................................ 10 Real Estate Development Incentives ............................................................................. 11 Tax Credit and TIF Drawbacks .................................................................................... 14 Qualified Opportunity Zones (QOZ) ............................................................................. 15 III. Avoiding Gentrification ...................................................................................................... 17 Community Involvement & Planning ............................................................................ 18 Controlling the Outcome ................................................................................................. 20 Conclusion ................................................................................................................................... 22 REVITALIZING THE STREET OF DREAMS 1 INTRODUCTION Most cities across the nation have heavily segregated communities of minorities and low- income individuals; these areas generally have lower quality, less desirable real estate than other parts of the city. Real estate developers deem these communities as undesirable due to high crime rates, development infeasibilities (primarily financial), and the risk of gentrification. As a result, these communities have often been overlooked and avoided. The results are obvious: dilapidated buildings, empty lots, and stagnant economic growth. “The fact of the matter is that we’ve got sub-standard properties in a number of areas around my district [North Omaha] … and we cannot continue to allow that to happen.” (Ben Gray, District 2 Councilman, as cited in Reye 2018). This thesis provides a comprehensive analysis of how investing in commercial real estate can foster economic growth in low-income communities and increase the overall quality of both commercial and residential properties in these areas. The following questions were used to guide this research: • How does commercial real estate development benefit the local economy? • What are some ways to attract new real estate development and investment in low-income areas? • How can the potential negative impacts of gentrification be avoided or mitigated? To provide context, the 24th Street corridor in Northeast Omaha, spanning from Cuming Street to Ames Street, is used as a case study (Figure 1). All arguments made throughout this paper reference this corridor. Journal articles and other publications are used to provide general evidence of the benefits of commercial real estate. Interviews with local community members and real estate professionals are also included to supplement published materials and provide a REVITALIZING THE STREET OF DREAMS 2 local perspective on the issues at hand. For the purpose of this paper, commercial real estate refers to any property used to generate income (e.g. office, retail, apartment, mixed use, etc). I. BENEFITS OF COMMERCIAL REAL ESTATE Background Once a burgeoning economy, the North 24th Street corridor has for decades experienced an absence of quality real estate investments, hindering the community’s ability grow. In the early 20th century, the corridor was composed of a diverse population and thriving businesses. According to NorthOmahaHistory.com, a website created by the North Omaha historian Adam Fletcher Sasse, “Hopping businesses, swinging clubs and streams of human traffic came and went from these blocks.” (Sasse). The community prospered economically until the dynamics of the neighborhood changed drastically in the mid 1900’s. The “white flight” phenomenon in the 1950s and early 1960s, an event in which most white people living in inner cities fled to the suburbs, quickly diminished the diversity of the North 24th Street community (Sasse). Subsequently, racial tensions resulting in riots and looting ravaged the community, leaving behind only the vestiges of a once prosperous area. “The North 24th Street neighborhood has never recovered. Since the 1980s, there have Figure 1: North 24th Street corridor from Ames St. to Cuming St. Retrieved from Google Maps been several government and private plans to improve the street, but overall they have failed to materialize.” (Sasse). In the nearly 70 years since the REVITALIZING THE STREET OF DREAMS 3 neighborhood riots, commercial real estate investments near and along the corridor have been scarce and infrequent. Though some investments have been made on North 24th Street (e.g. Union for Contemporary Arts, Fair Deal Village, Lake Point Building, etc.), a large portion of the corridor is still characterized by derelict buildings and empty lots. As a result, North 24th Street and the areas surrounding it are home to some of Omaha’s poorest residents. In 2018, the City of Omaha and Participating Partners conducted a study entitled, “Omaha-Council Bluffs Regional Assessment of Fair Housing,” which evaluated concentrations of poverty using census tracts in Omaha, Nebraska. Poverty concentrations were identified using the Racially or Ethnically Concentrated Areas of Poverty (R/ECAPs), a metric developed by the U.S. Department of Housing and Urban Development (HUD). R/ECAPs, by definition, must have a non-white population of 50 percent or more, with 40 percent or more of individuals living at or below the poverty line. As a predominantly African American community, North 24th Street falls within a R/ECAP census tract (Enterprise Geospatial Information System). Per the City of Omaha study, “While there have been periods of investment in the area [North 24th Street], it is now primarily identified by poverty, industrial activity, vacant property, empty lots, and limited commercial or retail providers.” (p. 169). Than Merrill, in